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Dentsu Group Integrated Report 20211. OUR NORTHSTAR2. Messages3. Medium-term Management Plan4. Our Business5. ESG6. Corporate Data08CEO messageClarifying our value through the crisisof COVID-19The Dentsu Group exists to realize abetter society by contributing to thegrowth of our clients, partners, people,and all consumers.Toshihiro YamamotoRepresentative DirectorPresident & CEO2020 was a challenging year for society, for our clients,our business and of course, our people.Throughout this year, our people across theorganization have shown themselves to be adaptable,demonstrating dedication and resilience. I want toexpress my thanks for their commitment to ourbusiness during a time of tremendous change.The defining feature of the year was of course theimpact of COVID-19. Our primary concern throughoutthe COVID-19 crisis has been the health, safety andwell-being of our people, as well as that of our clients,their customers, and our communities.Firstly, our people—the engine of our business. Iwould like to highlight a website. “Women From Home”created by Merlee Jayme, Chief Creative Officer,dentsu APAC. The website shares practical ideas tosupport our people and their families during thepandemic implemented in our APAC region.(https://www.dentsuwomenapac.com/)The physical and mental health of our people was atop priority across the Group with many initiativesimplemented at a market level to support them. Acrossthe Dentsu Group, remote working quickly becamecommon place across the organization to protect thesafety and wellbeing of our people and their families.The working life of our people was disrupted, but thebusiness reacted at speed. Our teams strengthenedtheir connections through our collaborative workplatforms and ensuring our leaders were visible was

Dentsu Group Integrated Report 20211. OUR NORTHSTAR2. Messages3. Medium-term Management Plan4. Our Business5. ESG6. Corporate Data09CEO messagemore critical than ever. Our new business teams quicklyconstant-currency basis) and adjusted operating profitadapted to hosting, and winning, pitches virtually. Thisof 123.9 billion yen (down 10.6% year-on-year,The longstanding, trusted partnerships we arewas possible through the investment in the operatingconstant-currency basis). As a result of swift costdeveloping with our clients demonstrates success asinfrastructure that we have been promoting throughoutaction across the entire Group we were able to deliverwe integrate talent, process, and technology.the Group over the past two years.an operating margin of 14.8% (down 0.2% year-on-year)These wins stand as a testament to our strategy ofsupply chain of Toyota.Secondly, supporting our clients. By utilizing ouras a result of thorough cost control in Japan andleveraging the deep expertise across our Group, withresearch, analysis, and forecasting capabilities, weabroad. I would like to pay tribute once again to theour proven ability to unite them into bespoke solutionsprovided our clients with consumer insights to helpefforts and ingenuity of our employees, both in Japanfor clients across our global network.them shape their response to the rapidly changingand abroad.environment we all experienced.The Group recorded a statutory operating loss ofWe have also been widely recognized by thirdparties, such as industry analysts.Finally, our communities. We have worked with our140.6 billion yen and a net loss of 159.5 billion yenForrester placed one of our agencies, Merkle as aclients to plan and implement a variety of solutions(attributable to owners of the parent). As president andleader in the Customer Database and Engagementthat contribute to local communities under the impactCEO of the Group, I recognize my responsibility forAgencies Wave and the Adobe Implementationof COVID-19. In China, we worked with a pharmacythese results.Services Wave. Carat, our global media agency atclient to provide free, online medical consultation2020 brought much success, both with new clientservices during the crisis. Together with another client,wins and industry recognition. We are honored to bewe worked to deliver free meals to hospital workers in agranted the responsibilities of new media accountsIn terms of creativity and capability of deliveringhighly impacted Asian market.such as Kraft Heinz globally excluding the US,solutions to our clients, we celebrated Dentsu Inc.’sDentsu International, also received a placing in theleader category for global media agencies.With this backdrop, there is also an opportunity forMcDonald’ s and Nestlé in China, and GaldermaYuya Furukawa receiving the President’s Award at theus at Dentsu to clarify our meaning, value and purposeglobally, while deepening our relationships with existingD&AD Awards in September for his outstandingin society.clients such as Generali and Heineken.contribution to creativity. Dentsu Group was selected“The Dentsu Group exists to realize a better societyResponding to the emerging client needs for brandas one of the Most Effective Agency Holding Groups atby contributing to the growth of our clients, partners,experience consultancies, our CXM and creative lines ofthe Effie, with dentsu mcgarrybowen and 360i selectedpeople, and all consumers.”business have won many accounts. And I’ m proud toas winning lead agencies.We believe that fulfilling this mission willannounce we have significantly expanded ourThrough our focus on sustainability, I am pleased tosustainably enhance the value we deliver to all ourrelationship with American Express, without a formalannounce that Dentsu International achieved thestakeholders including our shareholders.review through dentsu mcgarrybowen.ambitious goal it set itself in 2015 to procure 100%Review of 2020In Japan, we announced a joint venture with Toyota,renewable electricity by the end of 2020. Theelevating our existing partnership to deliver trueinternational business has also committed to becomingAs a result of the unprecedented impact of COVID-19digital transformation beyond marketing. The projecta n e t ze ro e m i s s i o n s b u s i n e s s by 2 0 3 0 . T h eon our industry, the Dentsu Group posted gross profith a s s ta r te d we l l w i t h t h e a i m o f e n h a n c i n gcommitment includes a new science-based target toof 835.0 billion yen (down 9.8% year-on-year,marketing and data management throughout thereduce absolute carbon emissions by 46% and offset

Dentsu Group Integrated Report 20211. OUR NORTHSTAR2. Messages3. Medium-term Management Plan4. Our Business5. ESG6. Corporate Data10CEO messageall unavoidable emissions through certified greenhouseholdings in Recruit Holdings and the review continuesmanagement of every company is how to integrate thegas removal projects. We also reconfirmed our listing inwith two property asset sales in Q1 2021. These actionscreation of social value with the growth of the business.the FTSE4Good Index by meeting its ESG standard.enabled us to deliver against our fourth objective ofWe provide “dentsu Sustainable Business Solutions”improving shareholder value by announcing a 30 billionbased on our unique consumer intelligence utilizingyen (maximum) buyback in February 2021.data and technology, and it is another growthThe Group also has announced that it is joining theValuable 500, which was launched last year at theWorld Economic Forum’s Annual Meeting in Davos, tocommit to respecting employee diversity anddeveloping solutions for people with disabilities.Full details of our transformation and cost savingprogram are covered later in this report (see p. 12).opportunity for the Dentsu Group.It goes without saying that it is we ourselves whoIn February 2021 we announced the Medium-termare under scrutiny for the social role and value of ourManagement Plan: “Sustainable Growth throughcompanies. If we are to provide our customers withComprehensive Review and Medium-termManagement Plan: “SustainableGrowth through Transformation”Transformation.” We are executing the Acceleratedsolutions to create social value, we must first take aTr a n s fo r m a t i o n P l a n a n d d r i v i n g B u s i n e s shard look at our own actions, straighten up, and fulfillTransformation to deliver growth and marginour responsibilities as a corporate citizen.In August 2020, our comprehensive review with fourOur strategy of Integrated Growth Solutionsthe Sustainable Business Board, chaired by Wendyclear objectives was launched in advance of theremains the center point of our vision. With ConsumerClark, to oversee both the delivery of dentsuMedium-term Management Plan.Intelligence at the core of our capabilities andSustainable Business Solutions, which focus on clientcreativity as our innate competitiveness, we createsustainability, and our own sustainability from the sameintegrated solutions across the total customerperspective.1. Create a more simplified structure2. Structurally and permanently lower operating expenses3. Enhance the efficiency of our balance sheet4. Maximize long-term shareholder valueWe have taken swift action. Announcing aimprovement from 2022.experience beyond marketing.At the end of March, the Dentsu Group establishedIn six months, we have made significant progress, butWe are proud to serve 95 of the world’s top 100we recognize there is more to do. I look forward toadvertisers as our clients—demonstrating the strengthupdating you on our continued progress throughoutof our offer—our opportunity lies with the ability to2021.deepen those client relationships.Holding company formationtransformation to simplify the business with associatedToday, the core competencies of our clients havecost savings generating approximately 75 billion yentransformed significantly over time. Consumers requireby 2022 across both Dentsu Japan Network and Dentsucompanies to provide social value through theirInternational. Dentsu Japan Network is reorganizing thecorporate behavior and their products. ConsumersTo embrace this change we created a new Groupbusiness into four domains and Dentsu International isinterest in corporate social roles and values has risenvision “an invitation to the never before.” as ourintegrating 160 agency brands to six. We launched adramatically, and companies are under intense scrutinyNORTHSTAR with eight values common to all of ourreview of our balance sheet, challenging whether weon an unprecedented basis. Companies must ensurepeople across the Group: “The 8 Ways.” The 8 Waysare the natural owner of all non-trading assets. Thistransparency and earn the trust and confidence ofdrive behavior and ambition in our people to deliver thereview resulted in the sale of the majority of ourconsumers and the public. The questions facing theb e s t fo r o u r c l i e n t s . O u r c l i e n t s w i l l s e e o n e2020 saw the formation of Dentsu Group Inc. as aholding company to support our two operating units.

Dentsu Group Integrated Report 20211. OUR NORTHSTAR2. Messages3. Medium-term Management Plan4. Our Business5. ESG6. Corporate Data11CEO messagego-to-market offer: dentsu.This is hugely complementary to our growth plansT h ro u g h “ o n e d e n t s u , ” we a re c re a t i n g a nwhich focus on the delivery of Integrated Growthenvironment in which the 64,000 people operating inSolutions. Wendy has already made a positive impactmore than 145 markets can form teams easily acrosswith our people and our clients. I have strong belief shegeographical and organizational boundaries, bringingis the right individual to return the internationaltogether unique talent and diverse perspectives thatbusiness to growth. In March 2021 Wendy joined thecan spark innovation from anyone, anywhere. Thisboard of Dentsu Group Inc. to strengthen the board, asradical collaboration empowers all individuals to createwell as enhance diversity, with greater internationalvalue and innovation, and gives us the ability to formrepresentation.diverse and new solutions around client needs and setsSecondly, in March 2020 we announced theus apart from our competitors to give us a renewedaccelerated buyout of the remaining Merkle shares.The events of the past 12 months havesource of differentiation.This delivered single-digit EPS accretion for Dentsudemonstrated the importance of working together,The diversity of our people has never been moreGroup in 2020, in addition to ensuring key talentcollaborating, and collectively working towards aimportant and the creation of a workplace whereretention and allowing us to accelerate the final stagecommon goal. I would like to express my thanks to theeach individual can thrive is central to the vision ofof the integration of Merkle. As I mentioned earlier,64,000 employees of the Dentsu Group around theone dentsu.Merkle remains a key contributor to our ambition ofworld during this difficult time, and thank our clients,reaching 50% revenues from Customer Transformationpartners, and shareholders who support us. Thank you& Technology over time.very much for your continued support.As part of this transformation, in September ouri n te r n a t i o n a l b u s i n e s s re b ra n d e d to D e n t s uInternational, symbolizing the unity between the Japanbusiness and the international business strengtheningthe dentsu brand and uniting all employees. ThisLooking aheadIn July 2021, we enter the 121st year from the foundingallows us to leverage our global skills with clientsof the Dentsu Group. The ancient Chinese calendar,able to access the best talent across the whole ofwhich is still popular in Japan, is based on a cycle of 60Dentsu Group.years. In other words, it is the start of the third cycle forWe saw further change at our internationalthe Dentsu Group from the July of this year.business in 2020 as well. Firstly, we welcomed WendyIn the next 60 years, we will contribute to theClark to the position of Global CEO of Dentsucreation of a better society while challenging ourselvesInternational Limited and as an executive member ofto change for the better.Dentsu Group Inc. in September. Wendy is a highlyWe want to continue to be a company thattalented executive with experience from the client sidecontributes to the growth of our clients, our partnersco u p le d w i t h a s t ro n g u n d e r s ta n d i n g of t h ew h o l i ve a n d wo r k , s o t h a t we c a n c re a te acomplexities of running a global advertising business.better society.

Dentsu Group Integrated Report 20211. OUR NORTHSTAR2. Messages3. Medium-term Management Plan4. Our Business5. ESG6. Corporate Data12CFO messageSustainable growththrough transformationArinobu SogaDirector and ExecutiveOfficerFY2020 reviewFY 2020 was a challenging year for society, our clientsand our business. The restrictions imposed across theglobe impacted spend on advertising and marketing asthe COVID crisis caused a slowdown in global demand.The impact of COVID-19 on our Group was feltfrom the first quarter of 2020 and continuedthroughout the year. The second quarter was thetrough in our performance and although the Groupdelivered sequential quarterly improvement throughthe third and fourth quarters, the Dentsu Groupreported organic revenue decline of -11.1% for FY2020.Dentsu Japan Network reported -8.4% and DentsuInternational reported -13.0% organic revenue decline.In Japan, although client spend on advertisingdecreased with the pandemic, the digital solutionsbusiness maintained momentum throughout the year,supporting clients’ ever-growing needs for digitaltransformation. This remains a significant opportunityfor the Group as we enter FY2021. ISID and DentsuDigital significantly contributed to the group revenueless cost of sales, both posting double-digit organicgrowth for the full year, giving confidence our solutionsare well placed to meet clients’ needs.At Dentsu International, media spend remained lowthroughout the year and our creative service linesuffered from a reduction in project-based work due tothe impact of the pandemic. However, the CXM serviceline was much more resilient showing an organicrevenue decline of -3.2%, while Merkle saw a decline ofonly -1%. The CXM business and Merkle in particularare well positioned to see an improvement in revenuesin FY2021 as clients increasingly focus on first partydata combined with robust ecommerce and D2Cstrategies. The performance media business alsoperformed well in the final months of FY2020, withclient spending focused on personalization and weexpect that trend to continue into 2021.Swift cost actionsIn order to mitigate the impact of the expected revenuedecline due to COVID-19, we reacted swiftly and took anumber of cost actions in the first quarter of 2020.These actions included an immediate review ofFY2020 revenue ratio and organic growth by regionJapan42%of rev lesscost of sales– 8.4%Organic GrowthAmericas26%of rev lesscost of sales–11 .3%Organic GrowthEMEA22%of rev lesscost of sales–12 .4%Organic GrowthAPAC (excl. Japan)10%of rev lesscost of sales–18.0%Organic Growth

Dentsu Group Integrated Report 20211. OUR NORTHSTAR2. Messages3. Medium-term Management Plan4. Our Business5. ESG6. Corporate Data13CFO messagecontractor roles and arrangements, improvement ofbusiness efficiency, and containment of M&A-relatedexpenses by pausing M&A activity.Personnel cost management was implemented inJapan through more flexible work-time management,and measures at Dentsu International includingreduced working hours in exchange for a temporarysalary reduction. I would like to offer my personalthanks to all our people who showed such dedicationand resilience during an enormously challenging year.These actions ensured our FY2020 operatingmargin stabilized at 14.8% as cost savings mitigatedthe top-line decline. However, as we looked beyond2020, we recognized the need to ensure thesetemporary cost savings could become more permanentin order to return the Group to growth and delivermargin improvement.Comprehensive reviewIn August 2020, the Group announced a comprehensivereview to accelerate the structural reform and businesstransformation required. Ultimately, the reviewaddressed how to improve value for our shareholders,employees, and clients.The review launched with four clear focused areas:1. Create a more simplified structure2. Structurally and permanently lower operatingexpenses3. Enhance the efficiency of our balance sheet4. Maximize long-term shareholder valueThe Group took swift, decisive action, with a1. Create a more simplified structure: benefiting bothclients and internal operations3. Enhance the efficiency of our balance sheetOn November 30, Dentsu Group announced the decisionDentsu Japan Network will simplify its structure into fourto divest the majority of its stake in Recruit Holdings, inbusiness lines: Advertising transformation, Businessline with our policy to red

Our ideas create new solutions and new beginnings for an ever-changing business environment. HOW: Open teaming To be first movers in an ever-transforming world, our hearts, minds and doors must be wide open—to the power of diversity, to ideas from anyone, anywhere. And by creating the Teaming Platform, we've made openness the organizing